Vlad Musteață, CEO of North Bucharest Investments, spoke to Property Forum about the outlook for the residential market in the north of Bucharest, as well as the agency’s accelerated sales growth over the past two years.
This interview was first published in Property Forum’s annual listing of "The 50 most influential people on Romania’s real estate market”.
How did North Bucharest Investments’ operations in Romania evolve during 2023 and what is your outlook for 2024?
In 2023, we recorded more than 400 real estate transactions in new blocks in the northern part of the capital, and the company’s turnover doubled from 20 million lei to 42 million lei.
In the first months of 2024, we continued to record 25-30% month-on-month increases, and our portfolio grew significantly, including dozens of real estate developments.
Anticipating the VAT increase to 9% and the reduction in the number of permits for new construction, many clients were motivated to complete transactions before these changes came into effect. In addition, the low rates on mortgage loans offered by banks have made property purchases more affordable for buyers, contributing to an increase in property transactions.
During H2 2023, especially in the last month, property sales accelerated. Data provided by the National Agency for Cadastre and Real Estate Publicity (ANCPI) from January 2024 confirmed this upward trend, and in Bucharest, for example, sales increased by 30% in December compared to the previous month. North Bucharest Investments performed above this average, with a 40% increase compared to November. We were also able to do this because northern Bucharest was particularly active, with high interest from investors buying with their own funds.
For 2024, we expect residential property market activity to remain at a high level and the number of transactions to continue to increase. We see an increase in interest in buying real estate from investors with medium and high budgets, who see the positive potential of the market and plan to resell in the next 12-18 months. We are with these investors through the entire process, from purchase to remarketing, to maximise the return on their investment.
In terms of the agency’s clients, what is the share of investors?
Investors make up a significant portion of our client base at North Bucharest Investments. These investors seek substantial returns on their property investments. They are interested in purchasing properties that offer an optimal mix of value, price growth potential and rental yield. Depending on each investor’s preferences and objectives, North Bucharest Investments offers a wide range of options, from apartments and individual houses to real estate development projects with long-term value growth potential. We help investors in the advisory area to diversify their portfolios and achieve attractive gains in the real estate market.
What are your expectations from the northern area of Bucharest in terms of new demand for premium housing?
We have high expectations for the demand for premium housing in the North of Bucharest. The North of Bucharest is known for its developed infrastructure, access to motorways and the ring road, proximity to the airport, major international schools, major shops and malls, green areas and forests nearby.
Many people are looking to settle in this area to take advantage of the comfort and exclusivity offered by all these amenities and the premium homes developed here.
Premium housing is also gaining momentum from the perspective of developers, who have sensed the growth potential of high-quality properties with some of the best amenities. Buyers interested in this part of the capital are looking for properties that offer a high level of comfort, modern amenities and stylish design. We are therefore confident that the northern area of Bucharest will continue to be a magnet for demand for premium housing and that our investments in this segment will meet the needs and preferences of buyers in this evolving market.
How will prices for new homes in the northern part of the city evolve?
It is difficult to make precise predictions on the evolution of new housing prices in this area, as this depends on a number of variable factors, including market supply and demand, general economic conditions, interest rates, legislative changes and many other external factors.
However, we do have some data that can help us anticipate the general direction of prices. The area is one of the most sought-after residential areas in the city and even the country, which will keep prices trending upwards. On the other hand, investments in new real estate developments, in the premium and luxury category, will generate supply with an impact on prices. If demand remains strong and supply cannot keep pace, prices could rise. Last but not least, the area and properties are attractive to investors due to good yields and the potential for increasing property values.
Thus, with strong demand and limited supply, we are likely to see further price increases for new homes in the northern part of Bucharest.
We have observed a 7% price increase compared to last year’s level in the market in the first months of 2024, and at this pace it is very likely that we will see a price increase of up to 15% by year-end compared to the whole of last year.
What effect will the downward trend in interest rates, which will also be implemented in Romania amid falling inflation, have on the local residential market?
The downward trend in interest rates and the moderation of inflation will make mortgage loans more accessible to a larger category of buyers. Lower mortgage rates may lead to an increase in demand for housing, especially among first-time buyers or those looking to move into a home with better conditions than their current home.
When demand increases, the economic mechanism says it puts pressure on house prices and this will make the housing market a more dynamic one, where area prices are dictated by demand at a particular time and not just the actual value of the property.
Another phenomenon we could see is increased investor interest, because when interest rates are low property investments could come with more attractive returns from rents or resale compared to other savings and investment options.
What are the advantages of buying a home in Bucharest compared to other capital cities in Central and Eastern Europe?
Buying a home in Bucharest, compared to other capital cities in Central and Eastern Europe, can offer better housing prices, as Romania is characterised by greater affordability compared to other capital cities in the region, such as Warsaw, Prague or Budapest. This price difference can make buying a home in Bucharest more advantageous for buyers with more limited budgets. On the other hand, Bucharest is the economic and commercial centre of Romania and offers good career and business opportunities, and this can be attractive to people looking to develop their careers or open their own businesses. The city can offer attractive opportunities in terms of costs, potential for increasing property values, career and business opportunities, and increasingly developed infrastructure.
